‘Who Owns South Africa’ report points to ‘commodification’ of healthcare in private sector

Released on Tuesday, 30 September, the report spotlights the “commodification” of healthcare in South Africa, with researchers arguing that private health services are being used for profit by a small group of powerful local and international financial actors who “see healthcare as little more than a collection of assets to trade”.

“There are over nine million people covered by medical aid in South Africa, with around 4.8 million (52%) covered by open schemes. Discovery, Bonitas and Momentum, the three largest medical aid schemes… cover over four million of these,” the report states.

It comes at a key moment in the debate over South Africa’s ailing health system, as the battle over the implementation of the controversial National Health Insurance (NHI) Act – signed into law last year – manoeuvres through the country’s courts.

The financialisation of healthcare, which is the growing power of financial actors and motives to direct domestic and global economic outcomes, was not unique to South Africa, said Luvano Ntuli, an investigator at Open Secrets and one of the authors of the report.

“It definitely reflects a global pattern… but I think what is particularly important in our context is we have this rapidly growing debate around National Health Insurance, which is supposed to challenge this issue around concentration of ownership. It’s really interesting seeing… how the corporate lobby is so influential in ensuring that the healthcare sector remains as financialised as it is,” Ntuli told Daily Maverick.

Ownership structure in private healthcare

The Open Secrets report on private healthcare is the second instalment in its series on “Who Owns South Africa”. At the launch on Tuesday, human rights lawyer and founder of the Health Justice Initiative Fatima Hassan noted that health was not a luxury but a right, adding that the future of the country’s health system was at stake.

“We have a corrupt, broken, dysfunctional public health system… [although] it’s not all that way. There’s a difference between our public health system and public health workers, and we shouldn’t conflate the two,” said Hassan.

“We also have a private health sector problem and a private health access problem in our country, in our region and globally... It’s very expensive. It’s actually inefficient. It overprescribes, it’s extractionist, and it’s hell-bent on profiteering.”

The report noted that the “big three” hospital groups – Life Healthcare, Mediclinic and Netcare – dominated the sector, accounting for about 83% of available beds and 87% of admissions.

“Private hospitals in South Africa have, over the last 10 years, increased their prices at approximately double the rate of consumer inflation,” the report states.

In medical aid schemes, there was a similar concentration of “big players”, said Open Secrets researchers. The number of schemes had nearly halved between 2000 and 2025, going from 144 to 77 due to significant consolidation in the sector.

South Africa spent nearly 42% of its total health expenditure on private, voluntary health insurance through medical aid schemes, even though less than 20% of the population were members of schemes, it continued.

“According to Statistics South Africa’s General Household Survey, only three out of 20 South Africans – 15% of all people – had access to medical aid at the end of 2023. While black South Africans numerically make up the largest portion of medical scheme membership (52%)... only around 10% of black South Africans are members.”

The Open Secrets report comes six years after the Competition Commission released the final findings of its Healthcare Market Inquiry (HMI), examining competition in South Africa’s private healthcare sector. The HMI found that the market was characterised by highly concentrated funders and facilities markets, disempowered and uninformed consumers, a general absence of value-based purchasing, practitioners who were subject to little regulation and failures of accountability at many levels.

The HMI noted that there had been “inadequate stewardship” of the private health sector by the National Department of Health.

Among the recommendations of the HMI was the creation of a new  supply-side regulator for health, which would oversee licensing, monitor competition and publish information on quality and performance. It also proposed reforms for medical schemes, including a mandatory minimum benefits package and simpler, more comparable options, said Open Secrets researchers.

“Six years since the Competition Commission released its findings, little has changed in the healthcare sector. If anything, the grip of entrenched players has tightened,” the report said.

Cross-ownership in the private sector

One of the problems identified in the Open Secrets report was the cross-ownership and potential “structural conflicts of interest” in the private healthcare industry.

One of the examples made was Remgro, the large South African investment holding company, which held “significant interests” in the supply side of private healthcare through its stake in the private hospital group Mediclinic, as well as the demand side of the market through the Discovery medical scheme.

In 2023, Remgro formed a consortium with SAS Shipping Agencies Services Sàrl and bought Mediclinic for R85-billion, with the acquisition carried out through Manta Bidco Limited, a company set up solely for the deal, stated the report. Remgro is also a shareholder in the Discovery medical scheme.

The Open Secrets report noted that the Health Market Inquiry had flagged cross-ownership between entities on both sides of the market as problematic because it could raise conflicts of interest. 

“For example, there is a risk that an administrator with links to a hospital group might favour contracts, pricing structures or network arrangements that benefit its related party, rather than seeking the best value for patients,” the researchers said.

For the year ending in March 2024, Mediclinic’s global operating profit rose more than 300% to R6-billion off the back of global revenues of R86.53-billion, according to the report.

The report noted that the Public Investment Corporation, which invests money for the Government Employees Pension Fund, held the largest stake in both Netcare, at 20.04%, and Life Healthcare, at 15.4%.

“As a result, government employees are also beneficiaries of the financial success of private healthcare companies,” the Open Secrets researchers stated.

“Looking at the other major shareholders, it is notable that several of the large institutional shareholders operate outside of South Africa. This means that a substantial portion of dividends paid by private hospital groups also leaves the country to benefit wealthy investors based elsewhere.”

NHI battles

The Open Secrets report noted that the NHI Act had been intended as an intervention to address South Africa’s “broken healthcare system”. However, many stakeholders had raised legitimate concerns about the implementation of the NHI, including its unclear funding model and the potential for corruption.

There are six legal challenges against the NHI on the books, led by the South African Medical Association, the Board of Healthcare Funders, the Hospital Association of South Africa (Hasa), the South African Private Practitioners Forum, the trade union Solidarity and the Health Funders Association (HFA).

Read more: Health Funders Association launches latest legal challenge to NHI Act, calling legislation ‘unworkable’

Read more: On what grounds are the legal challenges against the contentious NHI Act being fought?

The Open Secrets report said the objections to the NHI Act in the courts came from a few private players who continued to profit under the status quo of a failing health system.

“As much as there are… valid concerns around NHI that are playing out in courts, what we’re seeing is that change isn’t happening at the level it should be, because there are so many delays that are caused by the court cases,” said Ntuli.

“I think something that’s very interesting is trying to navigate how to deal with these genuine concerns, whilst also knowing that the consumer is still either paying ridiculous prices in the private healthcare system, or has absolutely no resources within the public healthcare system. At the end of the day, the consumer really is the one that loses out on this.”

With the NHI Act unlikely to be free of legal challenges anytime soon, Ntuli advocated for a clearer and more holistic approach to the regulation of corporate interest in the healthcare sector in the short term.

She hoped the Open Secrets report would “shed light” on the concentration of ownership in the private health sector and push people to engage around the question of how to address it effectively. 

Responses from the private sector

Dr Dumisani Bomela, CEO of the Hospital Association of South Africa, said the organisation welcomed “robust debate” on healthcare reform and remained committed to transparency, accountability and the constitutional right to quality care for all.

Hasa represents the majority of private hospitals in South Africa, including Life Healthcare, Netcare and Mediclinic.

“While the [Open Secrets] report raises concerns, we should guard against generalisations and misrepresentations which risk obscuring the private sector’s vital role in strengthening SA’s national health system. As the private hospital sector, we will continue to explore ways to collaborate with the public sector and extend healthcare services to the needy,” said Bomela.

He added that private hospitals offered infrastructure, expertise and investment that complemented public services in achieving universal health coverage. Challenges such as rising costs, workforce shortages and infrastructure constraints affected both the public and private sectors. 

The Health Funders Association, a nonprofit organisation representing 20 medical schemes and three administrators in South Africa’s private healthcare funding sector, said that about 90% of members’ contributions to medical aid schemes were directed to the payment of members’ healthcare claims or to building reserves. 

It added that inefficiencies and cost pressures were largely driven by the “prevailing fee-for-service remuneration model”, which was entrenched by the Prescribed Minimum Benefit regulations and rules of the Health Professions Council of South Africa. 

A fee-for-service model means physicians are compensated with a separate fee for each service rendered.

“The Competition Commission’s HMI rightly identified this as a systemic driver of inefficiency and escalating costs, and HFA has consistently supported the HMIs recommendations for reform, which are urgently needed,” said the HFA.

“While affordability remains a challenge, international benchmarking shows that private healthcare in South Africa compares favourably on a like-for-like basis with many other countries.”

The HFA said that access to medical schemes was constrained by affordability, not exclusionary practices. 

One the matter of the NHI, HFA said its litigation sought to secure a workable framework that benefited all South Africans.

Remgro described itself as a “responsible investor” with governance protocols in place to manage any risks associated with cross-ownership, cross-directorships or potential conflicts of interest between entities.

Remgro said its 7.69% stake in Discovery was held as a portfolio investment, and that the company did not have any board representation or operational involvement at the medical scheme. It noted that it had no cross-directorships between Mediclinic and Discovery.

“In South Africa, Mediclinic has approximately 20% market share in the private healthcare space. It faces strong competition from Netcare, Life Healthcare and other hospitals groups,” it said.

“In terms of the relationship between Mediclinic and Discovery, it must be noted that Mediclinic provides hospital services to members of different medical schemes and members of Discovery’s medical scheme are served by a variety of hospital groups in the market.” DM